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One classic approach to strategy revolves around gaining competitive advantage through valuable, scarce and distinctive resources — such as a strong brand or innovative technology. But there’s also a case to be made for building your company’s strategy around the innovative use of quite ordinary resources.

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Ben Kaufman is the founder and CEO of Quirky, a company that leverages the collective intelligence of an online community to launch new products such as Pivot Power, a flexible power strip.

In July 2007, TomTom, a European personal navigation device manufacturer based in Amsterdam, launched a takeover bid for Tele Atlas, a Dutch provider of cartographic data. The initial offering was 21.25 euros per share, which represented a premium over the stock price at the time, and the supervisory and management boards of Tele Atlas announced their support of the offer.1 But in autumn of that year, Nokia, which at that point was a leading cellphone manufacturer, announced an agreement to acquire Chicago-based Navteq, Tele Atlas’ main competitor, for an astounding price of approximately $8.1 billion — a move that indicated that smartphones would include navigation services in the future. The control of cartographic databases suddenly became a strategic imperative in the GPS industry. In reaction, TomTom’s main competitor, Garmin, tried to secure its access to what was now considered as a strategic resource by announcing an offer for Tele Atlas in October 2007 at a higher price of 24.50 euros per share. TomTom raised the stakes to 30 euros per share and eventually acquired Tele Atlas for 2.9 billion euros.

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However, the Tele Atlas acquisition proved to be an example of the “winner’s curse” — the idea that winners in auctions tend to overpay. TomTom had to borrow 1.6 billion euros to complete the acquisition of Tele Atlas and subsequently had to write down the value of the acquisition.2 Moreover, TomTom’s sales declined as the company faced increasing competition from GPS-enabled smartphones; during the period from fiscal 2008 through fiscal 2013, TomTom’s revenues fell more than 40%.

Meanwhile, the Israeli startup Waze launched its community-driven navigation smartphone application. Waze’s business model was quite different from TomTom’s: Waze’s cartographic data was directly collected from the users, at little cost, and Google acquired Waze in 2013 for a price in the neighborhood of $1 billion. Seven years after the takeover of Tele Atlas, it is clear that TomTom paid too much for a resource that seemed strategic and rare at the time.

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About the Authors

Frédéric Fréry is a professor of strategic management at ESCP Europe Business School in Paris as well as dean of the school’s Executive MBA program. Xavier Lecocq is a professor of strategic management at the University of Lille and at IESEG School of Management, both in France. Vanessa Warnier is an associate professor in strategic management at the University of Lille in France.